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How the latest trends and social changes occurring in China will impact New Zealand companies looking to do business there was the topic of discussion at the recent Hihiko Focus on Asia webinar, co-presented by the University of Canterbury Business School and the Asia New Zealand Foundation.
The Foundation's South Island establishment manager Alistair Crozier distills some of the discussion points and key takeaways.
Alistair Crozier: "China is not going to stand still – on so many levels, it will continue to evolve at an eye-watering pace."
Even as the globe continues to grapple with the virus that has turned our world upside down in 2020, two things about China are becoming clear: first, China will continue to be an important part of New Zealand’s post-COVID economic recovery. And second, China is not going to stand still – on so many levels, it will continue to evolve at an eye-watering pace.
My last time living in China was in 2014-18: I’ve been gone for almost two years, and already feel completely out of touch. During that last stay, I sawChinese families start to hire campervans for domestic road-trips, the national ‘bullet train’ network connect more and more of the country (as efficiently as in Europe or Japan), more confident LGBTQ+ communities, the share bike revolution, and everything from local craft beer to stand-up comedy, organic food and environmental consciousness start to trendstrongly. I can only guess what I have missed out on since.
So, I enjoyed the latest HihikoFocus on Asia webinar on China’s future directions, co-presented by the University of Canterbury Business School and the Asia New Zealand Foundation, as a chance to get back up to speed. What are the major trends and developmentsnow coming down the tracks in China that New Zealand business can’t afford to ignore?
We were privileged to be joined by three experts well qualified to guide us: New Zealand’s Ambassador to China, H.E. Clare Fearnley; China consumer/market expert and founder of The Solution Consultancy, Jerry Clode; and Shanghai-based fintech leader Greg Ah-Yeung. UC Business School International Dean Laura Meriluoto took on the challenge of facilitating the wide ranging discussion.
Watch the webinar here :
Here are my top five take-aways from a wide-ranging discussion:
China’s demographics will change. There will be more single-person households, as well as a larger population of older citizens with disposable incomes. Jerry Clode also described the post-1990s ‘Chinese global citizen’ with evolving travel tastes. These groups will consume in different ways, and New Zealand goods and servicesproviders will need to respond.
There will be a growing shift in focus from wealth to wellbeing. Having thrilled at the opportunities toearn money around the clock and use it to purchase previously inaccessible western luxury items, many Chinese middle class are now focusing back on lifestyle, family time and well-being. Younger Chinese are starting to champion environmental and sustainability issues. This presentsstrong potential opportunities for New Zealand business, given the alignment with our own brand values and stories.
New Zealand as a country has a solid, positive ‘brand’ in China, but our companies will have to elevate their individual brands as well. Local confidence and pride in Chinese brands are growing. “Made in New Zealand” will not be enough in future – wewill need to position specific brands as desirable social symbols recognised by China’s middle class as ‘must have’ products, signaling sophistication. Jerry Clode described this as the brand ‘First XV’and suggested that while a company like Zesprihad arguably made the team, we should be focused onsupplying the whole front row.
In the payments area, China is already trialling a digital form of the Renminbi, known as the Digital Currency Electronic Payment (DCEP) or Central Bank Digital Currency (CBDC). This will be legal tender, with a twist – consumers can transfer it to vendors without using bank accounts or even wifi, and withdraw from ATMs by holding their mobile phones next to the machine. There could be implications for global transactions, as well as for other platforms (Alipay and WePay will probably survive according to Greg Ah-Yeung, but what about smaller players?)
Some important new policy directions have been signalled this year by the Chinese Communist Party/Government. They include the concept of the dual circulation economy with a twin focus on a stronger internal economy as well as international trade;tech sector development;and China’s new targets for peak carbon emissions by 2030 and carbon neutrality by 2060. China has not yet published details on how it will effect these macro changes,but Ambassador Fearnley believes there will be scope for bilateral cooperation in some areas despite differences in scale. Above all, she notedthat China has set very ambitious targets before,and reached them – New Zealand would be wise to take the new announcements seriously.
For other topics that didn’t make my top five, including US-China relations, the NZ-China Free Trade Agreement upgrade, the sheer speed of “China time” change, and thinking about China as a series of ‘economic clusters’ rather than a single monolithic economy, a listen to the full webinar is a good time investment.In the absence of travel to see China for ourselves in 2020, we need all the insights we can find to keep up with the play.